Ecker Advised To Slash $20 Million In Capital Spending

March 27, 1991|By James M. Coram | James M. Coram,Staff writer

County Executive Charles I. Ecker was advised to slash $20 million from the $121 million in capital budget requests received in January.

The county cannot safely authorize more than $55 million in new general purpose bonds in the coming fiscal year -- $13 million less than this fiscal year and $20 million below the January request -- the county's bond affordability committee told Ecker this week.

Each year the committee reviews how much more long-term debt the county can assume in the coming year.

Ecker is working on a scaled-down capital budget to submit to the council Monday. He has not indicated what cuts he will make.

Capital budget money pays for such things as road and school construction, parkland acquisition, agricultural preservation and branch libraries.

The four "warning levels" used by the committee to measure new debt "make it clear that while (the county) has an above-average debt level, (it) has the capacity toabsorb and pay for that debt," the committee told Ecker.

Debt service as a percentage of revenue -- the warning level the eight-membercommittee deems most critical -- should not exceed12 percent, the committee said. If Ecker takes on $55 million of new debt, the cost of debt service as a percentage of anticipated revenues next year would amount to 8.8 percent, the same as this year.

If the cost goes above 12 percent, the county will be forced to reduce services or raise taxes, the committee told Ecker in its 12-page report. If the cost remains at a "reasonable level," the county "can afford to maintain or even expand services," the committee said.

The committee also looked at three other warning signals -- debt as a percent of the county's assessable base, debt as a percent of per capita income and debt spread out on a per capita basis. All were below warning levels.

"Although debt is reaching high levels, the wealth of the residents is increasing at almost the same rate and is able to absorb the increase," the committee told Ecker.

The committee cautioned: Given the county's current fiscal crisis, it does not expect the cost of increaseddebt to stay the same.

The committee predicts the cost of debt service will grow to 12 percent in seven years. Once that happens, the county may have to increase taxes to maintain the current level of services, the committee said.